THE BUFFALO NEWS
Should gasoline taxes be suspended for the summer?
Federal, state, local lawmakers disagree on whether cut would benefit consumers
By Matthew Spina NEWS STAFF REPORTER
Updated: 05/08/08 9:54 AM
Motorists can’t catch a break. Two of the presidential candidates want to suspend the federal excise tax on gas this summer, but their suggestion has yet to gain traction in Washington.
And don’t count on legislators for the state and for Erie County to suspend their taxes on gasoline. Measures that would allow savings that are puny when viewed against huge pump prices appear stalled in Albany and in Buffalo.
The cost of a barrel of oil, meanwhile, approached $124 Wednesday, and some forecasters see gasoline at $4.50 a gallon later this year.
“Just taking the tax off is easier on the consumer, but we’ll pay one way or another,” said Lee Herbst of Grand Island, who gassed up Wednesday at BJ’s Wholesale Club in the City of Tonawanda while legislators debated cutting the gas tax.
“What I’d really like to see is them go after the oil companies,” he said.
Do motorists want a break at the pump or a meaningful national energy policy that looks beyond short-term discounts?
The New York Times and CBS News polled Americans on the suggestions by Sen. Hillary Rodham Clinton, a Democrat, and Sen. John McCain, the presumed Republican presidential nominee, to suspend the federal excise tax that adds 18.4 cents a gallon.
Just 21 percent of those polled thought the idea was based on sound policy; 51 percent called it a bad idea.
In Erie County, at $3.72 for a gallon of gasoline, almost 69 cents goes to federal, state and county taxes.
Jennifer Jurczak and her husband spend $160 to fill their vehicles, a pickup and a small sport utility vehicle, so, she said, she naturally would love cheaper gas prices.
Of the $55.25 she paid at BJ’s Wholesale Club, which charged her $3.89 a gallon Wednesday, taxes accounted for $9.65.
Governments at the state and local levels are lending a sympathetic ear. But don’t count on more than that.
In Albany, the Republicancontrolled State Senate spent nearly four hours Wednesday debating and approving an election-year bill to suspend state taxes on gasoline between Memorial Day and Labor Day, which would save about 32 cents a gallon. The bill, which passed, 46-15, was backed by all Republican and Democratic senators from Western New York. Opposition came mostly from New York City Democrats.
“If we lower taxes, gas will cost less. What is so hard to understand?” argued State Sen. Andrew J. Lanza, the Staten Island Republican who sponsored the bill. He said he fills up in New Jersey for his weekly commute to Albany to avoid New York’s high gas taxes.
But Assembly Speaker Sheldon Silver, a Manhattan Democrat with virtual veto power over legislation in his house, does not support the measure. Gov. David A. Paterson has said he will back it only with a guarantee that the oil industry will pass along the savings to consumers.
The Erie County Legislature talked Wednesday about capping the county’s sales tax at about 14 cents a gallon — taxing just the first $3 a gallon — and no longer letting the county’s sales tax float with the price of gas.
Erie levies the state’s highest sales tax, 4.75 percent. County sales taxes are the only tax on gas that rise and fall with the price.
The county lawmakers proposing the tax break said they didn’t foresee gas prices nearing $4 a gallon when they drew up this year’s budget, so the government’s windfall should go back to consumers.
“I feel an obligation, on behalf of the constituents I represent, to do something,” said Legislator Michele M. Iannello, a Kenmore Democrat and a candidate for the State Senate.
Another sponsor, Legislator Kathy Konst, a Lancaster Democrat, called on gas merchants and the comptrollers of Erie and Albany counties to testify before her Finance and Management Committee. Albany County cut its gas tax in 2006 with mixed results: County officials saw no sign that the tax savings reached the motorists.
Her witnesses argued both sides of the coin.
“I realize there have been a lot of changes in the political leadership in Erie County,” said Carl Hasselbeck, who owns Jim’s Truck Plaza across Walden Avenue from Walden Galleria in Cheektowaga. “But I haven’t seen any money come back to the people. If you reduce your take, or your projected take on your sales tax, it will go back to the people of Erie County.”
Or would it?
“It is clear that the intended savings for Albany County drivers was a windfall for the oil industry,” Albany County Comptroller Michael F. Conners II said in a report after legislators there followed the state’s lead in 2006 and limited their sales tax to only the first $2 a gallon.
Fifteen counties took the step. Eight, including Albany, have reversed direction since then when they saw no change at the pump.
In Albany County, gas prices frequently exceeded those in neighboring Rensselaer, which didn’t cut its sales tax on gas, Conners told Erie’s lawmakers.
His overarching message: An Erie County tax cut, which wouldn’t take effect until Sept. 1, would not deal with the real issues in the run-up of gasoline: Speculators driving up prices on the New York Mercantile Exchange and the lack of a meaningful energy policy from Washington.
Konst once thought she could bring her measure to a vote today. But County Executive Chris Collins, his budget officials and Comptroller Mark C. Poloncarz oppose the measure because they say they don’t believe the government can go without the revenue. And some lawmakers came away Wednesday thinking the cut would not help consumers. Now Konst will not push the measure to a vote today.
“If there was a [tax] reduction, I will bet you the price will come down,” said Michael F. Newman, executive vice president for Noco Energy Corp, who also said he was offended by the statement that the tax cut would not be passed along.
Said Hasselbeck, the truck stop owner: “We are on track to remain with the dubious distinction of being the highest motor-fuel tax county in the highest motor-fuel tax state in the country.”
In Albany, supporters said the state attorney general and the consumer protection office can help ensure that tax cut savings reach consumers. Advocates pointed to neighboring states, New Jersey and Massachusetts in particular, where lower taxes keep a gallon of gas at least 20 cents cheaper than in New York.
Tom Precious of The News Albany Bureau and News Staff Reporter John F. Bonfatti, plus the Associated Press, contributed to this report.
mspina@buffnews.com
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